FY2020 Q1 (April June) · Security Code: 4689 Z Holdings Corporation Business Results FY2020 Q1 (April –June) July 31, 2020 0

Security Code: 4689

Z Holdings Corporation Business Results

FY2020 Q1 (April – June)

July 31, 2020

0

Table of contents

FY2020 Q1 Financial Results

& Impact of COVID-191

Business Topics2

4 Appendix

3 Company-wide Initiatives

22

FY2020 Q1 Financial Results - Topics

Full year

financial results

Aim for 2 consecutive terms of increase in revenue & op.

income; continue to leverage our diversified business portfolio

Business topicsUnify brands of our financial services to “PayPay”; promote multi-

partnership strategy

Q1 Financial results

Revenue increased YoY 14.8%; net income decreased YoY 16.9%

• Revenue increased due to growth of Commerce business; Shopping business

transaction value increased YoY 85.9%

• For the first time, op. income of Commerce business surpassed that of Media business,

due to synergy effects among group companies (Yahoo Japan, ASKUL, ZOZO, etc.) and

company-wide cost cuts

• Slight increase in total advertising revenue (YoY +1.2%) due to decrease in ad placements

impacted by COVID-19

• Net income decreased YoY due to recording of gain on change in equity interest in

PayPay Corporation in FY2019 Q1

Net leverage ratio *4 0.56 X 2.74 X n.a.

FY2020 Q1 Consolidated income statement

3

Item FY2019 Q1 FY2020 Q1 YoY

Revenue 238.6 (¥B) 273.8 (¥B) +14.8 %

Operating income 36.1 (¥B) 50.6 (¥B) +40.0 %

EBITDA *1 54.0 (¥B) 75.3 (¥B) +39.5 %

Other non-operating income and expenses *2 11.0 (¥B) -1.9 (¥B) n.a.

Equity in earnings of associates and joint venture *3 -5.9 (¥B) -3.7 (¥B) n.a.

Net income attributable to owners of the parent 27.3 (¥B) 22.7 (¥B) -16.9 %

Diluted EPS ¥5.40 ¥4.78 -11.5 %

Increase in revenue and operating income leveraging diversified business portfolio

*1 Change in EBITDA is mainly due to application of IFRS 16, Leases

*2 Includes gain on change in equity interest in PayPay Corporation (¥10.8 B)

*3 Mainly due to PayPay Corporation

*4 Net leverage ratio＝Net interest-bearing debt/EBITDA Excludes banking business. Figures for the most recent 12 months used for calculating EBITDA. Includes impact of IFRS16.

Commerce business: ¥5.08 B

▷ Sales promotional cost for

Shopping business, YAHUOKU!

Media business: ¥3.89 B

▷ Sales promotional cost for

apps, etc.

Others: ¥1.26 B

▷ Reduction/postponement of

CAPEX

▷ Travel expense, etc.

Q1 Cost cuts (variable/fixed cost)

Factors of change in operating income

4

Growth in Commerce business and cost cuts contributed to increase in op. income

FY2019 Q1 FY2020 Q1

Commerce

business

Marginal

income ↑

+6.89

Media

business

Marginal

income ↓

-3.00Gross income

40.05

ZOZO

consolidation

Op. income* ↑

+7.31

Fixed cost ↓

+3.27

36.16

50.63

Against budget: approx. JPY 10.2 B

(¥ B)Breakdown

* Reflects amortization of identifiable assets as a result of PPA

Impact of COVID-19

Expansion of domestic EC market Increase in value of online media

EC Merchandise Media/Advertising

Macro

environment

• Increase in cocooning consumption

due to restraint from going out

• Use of EC recommended by government

• Increase in time spent online due to

restraint from going out

Our business

environment

• Increase in new buyers

▷Q1 YoY+54%

• Increase in new stores

▷Q1 YoY+37%

• Increase in usage time via PC

▷Q1 YoY+9.7%

Macro

environment

• Logistical constraints due to

oversupply

• Reduction in advertisers’ marketing

budget

Our business

environment

• Decrease in demand for office

supplies/BtoB products due to remote

working

• Decrease in advertising demand from

specific industries (e.g. travel/recruitment)

Business environment under COVID-19

6

Mall

ShoppingSecondary

positive

impacts

Negative

impacts

FY2020 Q1 – KPI results

7

Slight increase in total advertising revenue, but strong growth in

transaction value of EC (merchandise) business

Item FY2020 Q1 YoY

Merchandise transaction value 653.6 (¥B) +37.4 %

Shopping business transaction value 379.3 (¥B) +85.9 %

Reuse business transaction value 202.0 (¥B) +0.8 %

Credit card transaction value 556.3 (¥B) +31.3 %

Total advertising revenue 79.1 (¥B) +1.2 %

Provision of service/functions adapted to users’ needs during COVID-19

Commerce Media/Search Media/Search – new functions

Congestion radar

Congestion status of

facilities

Congestion status

of train routes

Displayed

inventory in

physical stores

Stay Home

Feature

Business loan support to

corporations/individual proprietors8

Mall

Special feature: How

do we live with the

coronavirus?

News

Maps

Search

Info on government’s

special cash handouts

by municipalities

Search

Shopping

Transit

Information(The Japan Net Bank)

Newly installed a

COVID-19 tab

Third party survey results

9

Most trusted Japanese platform operator

No. 1

Total digital users

Nielsen, April 2020

Monthly Total Report

Nikkei BP Consulting, Web Brand Survey

2020 Spring/Summer (April)

Source: Nikkei BP Consulting, Web Brand Survey 2020

Spring/Summer (April)

Rank Brand MAU Reach

1 Yahoo Japan 79.50 mil 63.6％

2 Google 73.45 mil 58.8％

3 LINE 66.89 mil 53.5％

4 Rakuten 57.70 mil 46.2％

5 Amazon 52.35 mil 42.0％

Source: Nielsen April 2020, Monthly Total Report

Total no. of digital users TOP10

No. 1

in Web brand survey

Rank Website Score Difference

1 Yahoo! JAPAN 118.3 +11.7

2 Rakuten Ichiba 116.2 +1.4

3 Google 99.4 +0.8

4 Amazon.co.jp 98.1 -1.5

5 YouTube 94.9 +6.5

Rank Company Points

1 Z Holdings 100.0

2 NTT Docomo 99.4

2 Omron 99.4

4 Seiko Epson 98.9

4 SOMPO Holdings 98.9

No. 1

in 【Governance+Social】 division

Toyo Keizai, 2020 CSR Ranking

Source：Toyo Keizai, Top 500 CSR companies most

trusted under COVID-19 (July)

Challenging a new work style adapted to the “new normal”

10

Before After

(1) Remote work 5 times/month (Max.) ▶ No limit

(2) Flex time Core time (10:00-15:00) ▶ Abolish core time

(3) Subsidies¥3,000/month

(subsidy for tele-

communication expense)

▶Max. ¥7,000/month

(Telecommunication

subsidy/allowance for remote work)

(4) TransportationPayment of commuter

pass fee▶

Stop paying commuter pass

fee (Actual transportation expense

to be paid instead)

(5) Gig workers

Allowed employees’ side

business

Did not accept outside

workers as gig workers

▶Accept outside workers as gig

workers

Begin “Gig Partner” program

Transition to a new work style leveraging information technology (From Oct. 2020)

Ad placed in nation-wide

newspapers（July 16）

Revenue composition

（FY2020 Q1）

Our target for this fiscal year

11

Will aim to increase both revenue

and operating income for the full

year leveraging our diverse

business portfolio

Media

EC Merchandise

Others

Business Topics

Commerce Business

FY2020 Q1 Commerce business – KPI results

14

Item Q1 Actual results YoY Major measures/Major factors of change

EC transaction value 707.3 (¥B) +21.1 %

Merchandise transaction value 653.6 (¥B) +37.4 %

Shopping business transaction value 379.3 (¥B) +85.9 %

• Expanded due to consolidation of ZOZO

(Excluding ZOZOTOWN Main Store: YoY+42.4%)

• Expanded due to PayPay Mall

• Increase in cocooning consumption due to

restraint from going out

Reuse business transaction value 202.0 (¥B) +0.8 %

• Expanded due to PayPay Flea Market

• QoQ increase in YAHUOKU! due to increase in

visitors

Services and digital contents

transaction value53.7 (¥B) -50.5 %

• Large decrease in O2O service due to restraint

from going out

Gradually showing signs of recovery from June

Credit card transaction value 556.3 (¥B) +31.3 %

• Increased due to synergies with PayPay despite

decrease in offline usage due to restraint from

going out (Mainly travel/dining out)

Commerce Business

PayPay Mall – New measure: X (Cross) Shopping

16

X Shopping

As-is To-be

Introduced/Scheduled to be introduced (As of end of June)

32 tenants (6,666 offline stores)ONLINE OFFLINE

Able to check

inventory in brick

and mortar stores

Immediately

available in brick and

mortar stores

Target market - expanding

Physical stores*

c. ¥139 T

+Merchandise EC*

c. ¥10 T

X Shopping Approx. ¥149 T

Supporting retailers to expand sales route & maximize sales

Merchandise

EC*

c. ¥10 T

* METI 2019 International Economics Research for Building a Domestic and Foreign Integrated Economic Growth Strategy (E-Commerce Market Survey)

Examples of companies to which X Shopping is introduced

Commerce Business

Future synergies with ZOZO

18

Item Expected impacts

Collaborations in

reuse business

• Construction of ecosystem with shopping business

• Easy listing of items purchased from ZOZOTOWN in

PayPay Flea Market

Introduction of

PayPay

• Capturing of PayPay users

• Reduction of cost for payment commissions

utilizing group companies

Collaborations with

SoftBank

• Promote use by SoftBank users through in-store promotions

and provision of benefits

Media/Advertising

business

• Joint promotion of advertising business with Yahoo Japan,

using ZOZOTOWN and WEAR

Cooperation among

engineers

• Use of data science

• Improvement in product recommendation

Linkage in logistics ・ Use of ZOZOBASE

Creating synergies in various fields

Implemented

in July

To be

implemented in

Q2

Short term

Mid term

Commerce Business

Q3 Q4 Q1 Q2 Q3 Q4 Q1Q3 Q4 Q1 Q2 Q3 Q4 Q1

PayPay – KPI

20

Q3 Q4 Q1 Q2 Q3 Q4 Q1

Each KPI growing steadily, despite declining trend in offline use due to COVID-19

FY2018 FY2019 FY2020

*No. of merchant applications to PayPay (e.g. stores, taxis)

Approx. 9X

YoY

Approx. 2.9X

YoY

30.04 mil2.31 mil428.5 mil Approx. 3.5X

YoY

No. of merchants*（quarter-end)

No. of registered users (quarter-end)

No. of PayPay payments (quarter)

47.48 mil

0.79 mil 8.44 mil

FY2018 FY2019 FY2020 FY2018 FY2019 FY2020

PayPay – Developments in monetization services

21

FY2020

Finance

Loan for individuals

May 28

O2O

PayPay Pick Up

June 1

Finance

O2O

Information

distribution

Display of

coupons

Investment

Business loan

Within this fiscal year

Finance

Bonus management “PayPay Atobarai*”

(Lump-sum payment)

April 15

Fall 2020:

Plan to expand to all

users this fall ※Currently available only

to limited users

*Atobarai: Deferred payment

Insurance

Commerce Business

Now Sequentially from fall 2020

Credit card ▶

Bank ▶

Securities ▶

Insurance ▶

FOREX ▶

Asset

management ▶

Reorganization of financial brands

23

Financial brands to be unified to PayPay, to make full use of our diverse portfolio

Yahoo! JAPAN Card

The Japan Net Bank

Yahoo! JAPAN

Insurance

PayPay Card

PayPay Bank

PayPay Securities

PayPay Investment Trust

PayPay Insurance

Note: Company names scheduled to be changed after approval in shareholders meeting in each company and after approval by governmental agencies, etc.

Multi-partnership strategy

24

Enrich services through collaborations with financial services of

other companies and provide diverse options to our users

A銀行

B銀行

Credit card

A Card

B Card

Bank

Insurance

A Insurance

B Insurance

FOREX

A FX

B FX

A Asset Management

B Asset Management

Asset management

Securities

A Securities

B SecuritiesA Bank

B Bank

25

2020 Fall

Various promotional

measures for brand

integration coming up!

(Details to be announced)

Vol. 1

・・・

Card

Scenario finance initiative - progress

26

InstallmentsRepair warranty LoanCancellation

insuranceCar insurance

Launched in FY2019 Q4 Launched in FY2020 Q1 Launched in FY2020 Q2

Repair service provided to

home appliances/smartphones

purchased in YAHUOKU! (Max.

warranty: purchase price)

Warranty provided by:

Mitsui Sumitomo Insurance Co.,

Ltd.

Application and usage of credit

card loan

Provider: The Japan Net BankScheduled to be sequentially launched from Q3 onwards

Launching financial products that fit the nature of each service

(YAHUOKU!) Travel Mall Car

Navigation

Coverage of users' cancellation

fee for reservations of "Yahoo!

JAPAN plan" provided by Ikyu

Corporation

Insurance provided by:

Mysurance

Current Situation and Outlook

(Commerce Business)

+61.0%+55.5%

+58.8% +76.7%+86.9%

+94.0%

+59.6%

Jan Feb Mar Apr May Jun Jul Aug Sep

Current situation and outlook

28

Growth expected to decline due to relaxed cocooning consumption,

termination of government’s promotional measures on cashless payment, and

changes in our point-reward program

State of emergency lifted (5/25)

Termination of government’s cashless payment

promotional measure (6/30)

2020 ・・・

Shopping business transaction

value （YoY growth rate）

Change in our point-reward program (7/1-)

Government’s

individual number

card point

program*Declaration of state of

emergency nation-wide (4/16)

Note: Figure for July is the cumulative figure for July 1 – 26, 2020 and the comparison with the same period last year.

*Japanese government’s program to promote registration of individual number card and cashless payment.

Media Business

Flexible ad placements that meet various purposes

and issues faced by advertisers (from awareness,

acquisition to loyalty) provided in one-stop

1. Flexible ad placements that meet various purposes

Renewed to easy-to-use/operate & intuitive tools

2. Easy to use ad management tools

From a distribution algorithm mainly geared to

website referral, renovated to an optimal distribution

algorithm that suits ad purpose

3. Optimal distribution algorithm suited for purposeIntegrated to “Yahoo! JAPAN Ads”

Integrated display advertising/services into one platform

Yahoo! JAPAN

Premium Ads

Separate advertising platforms

Before

Sequentially introduced from July onwards

Yahoo! JAPAN Promotional Ads

Yahoo! JAPAN

Display Ad Network

Reservation Programmatic

Integration of advertising platforms (Sequentially introduced to advertisers from July)

Display advertising

Programmatic advertisingReservation advertising

30

Integration of advertising platforms: Changed classifications to accommodate rebranding of ad products

Classification Main products

Paid search

advertisingSponsored Search

Display

advertising

YDN and

othersYDN, Criteo, etc.

Premium

Advertising

Premium Advertising

Shopping advertising

Classification Main products

Search advertisingYahoo! JAPAN Ads

“Search advertising”

Display

advertising

Programmatic

advertising

Yahoo! JAPAN Ads

“Display ads”

（Programmatic-based)

Shopping ads

(Programmatic-based)

Reservation

advertising

Yahoo! JAPAN Ads

”Display ads”

（Reservation-based)

Shopping ads

（Reservation-based)

Before After

Former YDN and others

Former Premium Advertising

31

FY2020 Q1 Total advertising revenue - results

Item Q1 Actual results YoY Major measures/Major factors of change

Total advertising revenue 79.1 (¥B) +1.2 %

Search advertising 35.4 (¥B) -11.6 %• Decrease in ad placements due to COVID-19

(Q1 -¥9.7 B)

Display advertising 43.6 (¥B) +14.7 %

Programmatic advertising 38.1 (¥B) +21.5 %

• Increase in traffic to media services due to COVID-19

• Successful product-related measures (e.g. addition

of header bidding)

• Increase in shopping advertising revenue in line with

growth in shopping business

Reservation advertising 5.5 (¥B) -17.1 %

• Decrease in ad placements due to COVID-19,

despite increased ad placements by governmental

authorities

32

Media Business

Integrated marketing solution - New service (Measurement of store visits)

Encounter Search Visit store Purchase (Pay)

Display

advertising

Search

advertising

PayPay

Consumer

Gift

Launched in

FY19 Q3

PayPay

Retail Gift

Launched in

FY19 Q4

Measurement of

store visits

FY20 Q1

Visualized Yahoo! JAPAN Ad’s referral effectUser actions

Digital (Online)

Yahoo! JAPAN Ads

Brick-and-mortar (Offline)

Yahoo! JAPAN Sales Promotion

Integrated marketing solution

34

Measurement of store visits – example

35

Yahoo! JAPAN

Ads

Note: The structure of measurement is provided by SoftBank Corp.

This initiative is expected to be deployed in full scale as soon as we are prepared to provide explanations on how we measure store visits and

how we handle data (incl. how to stop measurement) to our individual users.

Check ad effects through

report on collected results

Wi-Fi

Begin verification of store visit measurements in selected industries

Wi-Fi Wi-Fi

Ad contact Visit store

Car dealers Mobile phone shop Supermarket

Strengthened sales activities

Collaborations with SoftBank Joint business plan

Acquisition of new clients

Increase ad placements by existing clientsSet clear goals with clients and conclude annual

contract for collaborations as a business partner

Major client

• Large-scale clients (SoftBank clients)

• Mid-small scale clients（Yahoo! JAPAN

clients）

• Large-scale clients

Major

proposal

• For SoftBank clients

► Proposals leveraging data use

• For Yahoo! JAPAN’s existing clients

► Build operational support system, new

proposals/planning for ad placements

• Proposals leveraging data use

• Mid-long term collaborations throughout the

clients’ marketing planning

Topics

• Established horizontal sales organization in

both companies, in May

• Q1 Revenue from synergy: Approx. ¥3 B*

（FY2019 H2 ¥4.4 B)

• No. of companies w/ contract*：YoY+133%

• Transaction amount of contract*：YoY+54%

Visualize

Business

issues

Formulate

Marketing

plan

Decide most

suitable

ad distribution

* Actual result as of July 9, 2020 36* Gross revenue before deduction of incentive payments

Current Situation and Future Outlook

(Media Business)

+8.9%

+8.8%+10.0%

-1.5%

-2.6%

+7.4%

+2.8%

Jan Feb Mar Apr May Jun Jul Aug Sep

Current situation and outlook

38

Outlook of advertising demand continues to be uncertain under COVID-19

2020 ・・・

Declaration of state of emergency

nation-wide (4/16)

State of emergency lifted (5/25)

Total advertising revenue

（YoY growth rate）

Note: Part of the figure for July includes expected figures.

Company-wide Initiative

Business integration with LINE

40

• Procedures and measures under the competition laws of some

countries have not been completed*, due in part to the impact of the

global spread of COVID-19.

• We are currently not aware of any material issues relating to the

procedures required, etc.

• The completion of the business integration is expected to be later than

initially anticipated (October 2020).

• A revised schedule will be announced as soon as it is confirmed.

* For details, please refer to our IR News dated June 30, 2020, “Announcement Regarding Progress Toward Implementation of the Business Integration”.

Creating a large future that can

only be shaped by Z Holdings

Unleashing the infinite potential of all people,

with the power of information technology

Appendix

FY2020 Q1 Factors of change in consolidated operating income

44

Item Actual results YoY Major factors of change

FY2020 Q1 Results 36.1 (¥B)

YoY

difference

Revenue +35.2 (¥B) +14.8 %

• Increase due to consolidation of ZOZO +33.6 (¥B)

• eBOOK +2.3 (¥B)

• YJ Card +2.2 (¥B)

• Ikyu -3.5 (¥B)

Cost of sales -1.6 (¥B) -1.6 %

• Increase due to consolidation of ZOZO +1.5 (¥B)

• Decrease in advertising cost of sales due to decrease in advertising

revenue (excl. shopping ads)

• ASKUL Group -1.8 (¥B)

SG&A(Major items only↓)

+22.4 (¥B) +22.3 % Increase due to consolidation of ZOZO +24.8 (¥B)

Depreciation and amortization +7.0 (¥B) +40.0 %• Increase due to consolidation of ZOZO +5.1 (¥B)

• Increase in software, servers, etc.

Shipping cost +6.7 (¥B) +113.8 % Increase due to consolidation of ZOZO +6.6 (¥B)

Personnel expenses +4.9 (¥B) +20.4 % Increase due to consolidation of ZOZO +4.6 (¥B)

Commissions expenses +2.6 (¥B) +193.0 % Increase due to consolidation of ZOZO +2.4 (¥B)

Business commissions +2.3 (¥B) +16.6 %• Increase due to consolidation of ZOZO +3.2 (¥B)

• Yahoo Japan -0.8 (¥B)

Sales promotion cost -4.6 (¥B) -27.4 %• Decrease due to cost cuts

• Increase in point-reward cost due to increase in transaction value

FY2020 Q1 Results 50.6 (¥B) +40.0 %

FY2020 Q1 Impact from consolidation of ZOZO

45

Item ZOZO FY2020 Q1 FY2020 Q1 (excl. ZOZO) YoY

Revenue 33.6 (¥B) 240.2 (¥B) +0.7 %

Operating income *1 7.3 (¥B) 43.3 (¥B) +19.8 %

Net income 4.9 (¥B) 22.5 (¥B) -19.0 %

Net income attributable to

owners of the parent 2.4 (¥B) 20.2 (¥B) -26.0 %

Consolidated from Nov. 2019

*1 Reflects amortization of identifiable assets as a result of PPA

*2 Indefinite-lived intangibles

Goodwill Total 212.9 (¥B)

PPA

Total 502.1 (¥B)

Amortization

(FY2020 Q1)3.3 (¥B)

Item AmountAmortization period

(Straight line)

Customer base (Shops/users)

322.0 (¥B) 18-25 years

Trademark*2 178.7 (¥B) -

Others 1.4 (¥B) 4 years

FY2020 Q1 Statement of financial position

46

Consolidated (IFRS) The Japan Net Bank, Limited (JGAAP) YJ Card Corporation (JGAAP)

(¥B)FY2019

Q4

FY2020

Q1Difference

Assets 3,933.9 3,980.3 46.4

Cash and cash

equivalents 880.1 902.5 22.4

Trade and other

receivables 386.7 399.4 12.6

Loans in credit

card business 342.2 342.9 0.7

Investment

securities in

banking business415.8 422.9 7.1

Property and

equipment 131.2 131.1 -0.0

Intangible assets 679.3 677.4 -1.9

Liabilities 2,886.0 2,948.3 62.2

Trade and other

payables 487.2 474.0 -13.1

Customer deposit

in banking

business903.1 1,009.4 106.3

Interest-bearing

liabilities 1,086.4 1,194.9 108.4

Equity 1,047.8 1,031.9 -15.8

(¥B)FY2019

Q4

FY2020

Q1Difference

Assets 995.5 1,109.3 113.8

Cash and cash

equivalents 323.3 425.6 102.2

Trade and other

receivables 20.5 21.8 1.2

Loans in credit

card business －－－

Investment

securities in

banking business425.8 432.9 7.1

Property and

equipment 0.6 0.6 -0.0

Intangible assets 7.0 6.9 -0.0

Liabilities 941.0 1,053.6 112.6

Trade and other

payables 15.5 15.8 0.3

Customer deposit

in banking

business920.3 1,033.6 113.2

Interest-bearing

liabilities －－－

Equity 54.5 55.6 1.1

(¥B)FY2019

Q4

FY2020

Q1Difference

Assets 554.2 566.4 12.1

Cash and cash

equivalents 127.4 126.7 -0.7

Trade and other

receivables 14.8 26.2 11.3

Loans in credit

card business 337.4 337.4 0.0

Investment

securities in

banking business－－－

Property and

equipment 4.8 4.7 -0.1

Intangible assets 29.4 29.5 0.1

Liabilities 523.2 533.7 10.4

Trade and other

payables 265.5 272.9 7.4

Customer deposit

in banking

business－－－

Interest-bearing

liabilities 245.3 249.3 3.9

Equity 30.9 32.6 1.6

Note: Figures before internal transactions within the

Group are eliminated.

Note: Figures before internal transactions within the

Group are eliminated.

25.317.5

3.6

0.90.3

FY2019 Q1 FY2020 Q1

Financial data

FY2019 Q1 FY2020 Q1

Operating CF

Investment CF

- Adjusted FCF

18.8

29.0

(¥B)

* Includes right-of-use assets of ZOZO, Inc.

Note: Excludes banking business.

Securitization of credit card receivables is added in operating cash flow.

Adjusted FCFCAPEX

(¥B)

-28.4

109.1

-24.0

-97.6

-126.0

85.1 Impact of ZOZO consolidation*

Right-of-use assets

Property & equipment/Intangible assets

47

FY2019 Q1 FY2020 Q1

181.7

257.0

102.3

702.9

0.00

0.50

1.00

1.50

2.00

2.50

3.00

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

FY2019 Q1 FY2020 Q1

Financial data

48

(Excludes banking business)

Approx. 2.74 x

Approx. 0.56 X

Interest-bearing debt/Net interest-bearing debt Net leverage ratio

Note: Net leverage ratio＝Net interest-bearing debt/EBITDA

Figures for the most recent 12 months used for calculating EBITDA.

Includes impact of application of IFRS 16.

Note: Net interest-bearing debt＝Interest bearing debt – Cash and cash equivalents

Includes impact of application of IFRS 16.

(Excludes banking business)

(¥B) (¥B)

EBITDA

Net interest-bearing debt

- Net leverage ratio

Lease liabilities

Securitization

Loan

Bond

- Net interest-bearing debt

130.0

118.0

118.0

87.1553.7

446.5

110.7

93.0

102.3

702.9

1,204.0

453.1

Major funding activities

49

Amidst market uncertainties due to COVID-19, issued a total of

¥200 B corporate bonds

Series Amount Interest rate Redemption

14th Series Unsecured Bonds (1.5 year bond) 25 (¥B) 0.20 % Dec. 2021

15th Series Unsecured Bonds (3 year bond) 80 (¥B) 0.35 % Jun. 2023




Refinanced the funding for acquiring ZOZO, and secured stable sources of funds

Commerce

Business

Commerce business

(E-commerce, Finance, etc.)

Consolidated subsidiaries

directly under Z Holdings

Group companies directly under

Z Financial

Media

Business

Media business

(Media, Advertising, etc.)

Consolidated subsidiaries

directly under Z Holdings

Z Holding’s new corporate structure

50

From Y to Z - Structure that creates a greater futurePresident & Representative Director

Kentaro Kawabe

・・・

President &

Representative

Director

Kentaro Kawabe

President &

Representative

Director

Tomoaki Tanida

Image of our long-term revenue composition

51

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 ・・・・・・・・・ Future

Will continue to grow while drastically changing our revenue composition

to meet the changes in the business environment

Data solution

Fintech

E-commerce

Integrated marketing solution,

shopping advertising

Search advertising,

display advertising

(excl. shopping advertising)

Operating income – long-term outlook

52

FY18 FY19 FY20 FY21 FY22 FY23 … … … … Future

FY2018

¥140.5 B

Maintain

over ¥140 B

op. income level

Businesses to be

strengthened will be

the growth driver to

expand income

Businesses to be strengthened (Shopping advertising, Integrated marketing

solution, Financial & Payment, Membership, Reuse business)

Advertising income – base (Search advertising, display advertising) Invest in measures to expand users and

EC transaction value, and start up new

businesses, etc. to achieve:

- FY2022

▶ Double-digit revenue growth

Monetize increasingly activated users'

economic actions to:

FY2023 - Future

▶ Bring income to an expansionary phaseNext development stageResults Period for structural reform

Record high

FY2023

￥225.0 B

Note: Other business and adjustments are prorated to businesses to be strengthened and

advertising income (base), according to their composition ratio.

Customer Base No. of users: Approx. 80 mil *

Z Holdings - Service map

53

Finance/Payment/Fintech

Digital ContentsCommerceMedia

SearchLocal Information

O2O

PIM CSRData/AIFor corporations

BlockchainCar navigation

Shopping Auction Fortune telling Gameebookjapan

(Digital books)

LocoTravel

booking

Ikyu.com

(Restaurant)

Ikyu.com

(Hotel)

Real

estate

Vocal assistant

PayPay

(Smartphone payment)

YJFX

（FOREX）

The Japan Net Bank

(Internet banking)

TaoTao

（Cryptocurrency trading）

TOP page Weather/Disaster News Finance

Knowledge searchSportsnavi

(Sports news site)

GYAO!

(Video streaming)

Retty (Restaurant information) kurashiru (Recipe video service)

Transit information Map Search Real-time search Online walletCredit card

KidsInternet

fund raisingCalendarCrowdsourcingResearch

LOHACO

（B to C EC）

ASKUL

（B to B EC）

ZOZO

（Fashion online

shopping）

PayPay

Flea Market

PayPay

Mall

Beauty

Job search

e-Mail

* Annual logged-in user IDs.

Materiality matrix for Z Holdings Group

54

Quality Education4

Gender Equality5

Clean Water and Sanitation6

Decent Work and Economic Growth8

Industry, Innovation and Infrastructure9

Reduced Inequalities10

Sustainable Cities and Communities11

Responsible Production and Consumption12

Climate Action13

Life Below Water14

Peace, Justice and Strong Institutions16

Partnerships for the Goals17

The numbers and colors in the matrix

coincide with the SDG icons.

Leve

l of s

takeh

old

er c

on

cern

Importance to Z Holdings Group◆Water/land use

6

◆Anti-corruption

◆Bio-diversity

13 14

◆Accessibility

10

◆Relationship with local community

11

◆Improving media literacy

9

◆Diversity/inclusion

5 10

◆Fair competition

16

◆Illegal/harmful content

4 9

◆Sound advertising market

9

◆Correct AI use

9

Corporate

governance

Risk

management

9

データ利活用

による貢献

◆Pollution/waste

13

Response

to climate

change

13

Sustainable

production/

consumption

12

Supporting

the future

generation

4

Health &

safety

management

8

Rewarding

workplace

8

Data

security

9

Network

reliability

9

Contribution

Using data

9

Disaster measures/

Recovery support

11 17

Solving social

Issues with

IT

11 17

Note: Big circles are especially important to the stakeholders and the Z Holdings Group, and need to be dealt with focus.

Business segment breakdown

55

Note: The contracts of business services are concluded with corporations; the contracts of personal services are concluded with individual users.

The same product may be classified in different segments depending on the contractor.

Commerce

Business

Advertising Display advertising (Programmatic, reservation), ZOZO

Business Services

(For corporations)

ASKUL, ZOZO, Affiliate-related services, Reservation-related services, Corporate system-use fees of

YAHUOKU!, Payment-related services, Banking-related services, Credit card-related services and

others, Real estate-related services

Personal Services

(For individuals)

LOHACO, ZOZO, Yahoo! JAPAN Premium, Personal system-use fees of YAHUOKU!, PayPay Flea

Market sales commission, Credit card-related services, Pet supplies-related services,

Telecommunications carrier-related services, Banking-related services, E-book-related services, FX-

related services and others, Payment-related services

Others Banking-related services

Media

Business

Advertising Search advertising, Display advertising (Programmatic, reservation)

Business Services

(For corporations)Media-related services, CRM-related services and others

Personal Services

(For individuals)Video-related services and others

Others

Advertising

Business Services

(For corporations)Utilities payment-related services and others

Personal Services

(For individuals)Yahoo! JAPAN Mail, Yahoo! JAPAN Address Book, Utilities payment-related services and others

Yahoo! JAPAN Shopping,

PayPay Mall, ZOZOTOWN,

LOHACO, Charm

EC transaction value

Merchandise

Services and

digital contents

Shopping business

ASKUL BtoB

Reuse business

Other(Merchandise)

Yahoo! JAPAN Tickets,

Ouchi-Direct

Definition of EC transaction value

56

O2O

Other(Services and digital contents)

Ikyu, Yahoo! JAPAN Travel,

Yahoo! JAPAN Dining

Fee-based digital contents

YAHUOKU!, PayPay Flea Market,

ZOZOUSED

Advertising products

57

Advertising Products Main Format Fee CalculationPlacement

PagesType of Advertiser

Search

advertising Yahoo! JAPAN Ads “Search advertising” Text

Cost per-click

Search results

pages

Major

corporations/SMEs

Display

advertising

Programmatic

advertising

Yahoo! JAPAN Ads

“Display ads”

(Programmatic-based)

Text

Banner

Top page

Interior pages of

service sites

Partner sitesVideo Cost per-view

Shopping ads

(Programmatic-based)Text banner Cost per-conversion

Yahoo! JAPAN

Shopping

PayPay Mall

Tenants of Yahoo!

JAPAN Shopping,

PayPay Mall

Reservation

advertising

Yahoo! JAPAN Ads

”Display ads”

(Reservation-based)

Rich (incl. video)

Banner

Cost per-impression

(Reservation-based)

Top page,

Interior pages of

service sites

Major corporations

Text

Banner

Cost per-guaranteed

period, etc.

(Reservation-based)

Yahoo! JAPAN

Shopping

PayPay Mall

Tenants of Yahoo!

JAPAN Shopping,

PayPay MallShopping ads

(Reservation-based)Text banner

Cost per-guaranteed

period, etc.

PayPay Corporation – capital structure

58

Shareholding ratio

May 2018

（At founding）May 2019 As of end of March 2020 As of end of June 2020

Common stock

Yahoo Japan 50 % 25 % 25 % 25 %

SoftBank 50 % 25 % 25 % 25 %

SoftBank Group - 50 % 50 % 50 %

Total 100 % 100 % 100 % 100 %

Preferred stock*

Yahoo Japan - - 50 % 50 %

SoftBank - - 50 % 50 %

SoftBank Group - - - -

Total - - 100 % 100 %

Voting rights ratio

As of end of June 2020 25.0%

・April 2020 onwards, may be converted to common stocks (conversion rate=1:1)

・Voting rights ratio after conversion: 36%

Business integration with LINE

59

Post-integration structure

- All incremental shares are issued to JV

- No. of treasury shares to be allocated is

undecided

Exchange Ratio

No. of Z Holdings shares

before/after share exchange

General

shareholdersJV （LINE）

Succeeding

company

50% 50%

100% 100%

34.7% 65.3%

Integrated

company

1 ： 11.75

4.8 Bshares

▶ 7.7 B shares

Disclaimer

Statements made at the meeting or included in the documents that are not historical facts are

forward-looking statements about the future performance of Z Holdings Corporation (Company,

Z Holdings) and its consolidated subsidiaries and affiliates.

The Company cautions you that a number of important factors could cause actual results to differ

materially from those discussed in the forward-looking statements.

Such factors include, but are not limited to, the items mentioned in “Risk Factors” in “Consolidated

Financial Statements and Independent Auditor's Report” (Japanese only). Unauthorized use of the

information or the data in this document is not permitted.

Unless otherwise specified, English-language documents are prepared solely for the convenience

of non-Japanese speakers.

If there is any inconsistency between the English-language documents and the Japanese-language

documents, the Japanese-language documents will prevail.

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FY2020 Q1 (April June) · Security Code: 4689 Z Holdings Corporation Business Results FY2020 Q1 (April –June) July 31, 2020 0

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